As the complexities of modern economies grow, traditional approaches to industrial policy face increasing scrutiny. For decades, debates have raged about how governments can intervene to foster innovation, address market failures, and create sustainable development paths. Today, industrial policy has undergone a transformation, and now embraces elements of market liberalism.
In this episode of Innovation Matters, Professor Michael Munger from Duke University explores these issues, suggesting that industrial policy often oscillates between two extremes: setting the foundational rules of the game for markets to thrive and directly managing industry outcomes through subsidies, regulations, or nationalization. He highlights the inherent tensions in these approaches, including the risks of rent-seeking, misaligned incentives, and the difficulty of predicting which innovations will succeed.
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As the complexities of modern economies grow, traditional approaches to industrial policy face increasing scrutiny. For decades, debates have raged about how governments can intervene to foster innovation, address market failures, and create sustainable development paths. Today, industrial policy has undergone a transformation, and now embraces elements of market liberalism.
In this episode of Innovation Matters, Professor Michael Munger from Duke University explores these issues, suggesting that industrial policy often oscillates between two extremes: setting the foundational rules of the game for markets to thrive and directly managing industry outcomes through subsidies, regulations, or nationalization. He highlights the inherent tensions in these approaches, including the risks of rent-seeking, misaligned incentives, and the difficulty of predicting which innovations will succeed.
From the industrial revolution to the digital era, innovation has redefined economies and societies, offering new opportunities and challenges. However, balancing the promotion of innovation with the need for responsible oversight remains a key issue for governments, businesses, and communities.
In this episode of Innovation Matters, Arthur Diamond, Professor of Economics at the University of Nebraska Omaha, shares his insights on innovative dynamism — where technological advancements drive significant transformation. We explore the historical evolution of innovation, comparing the more open, dynamic environment of the 19th century with the increasing role of state-led regulation that emerged in the 20th century, particularly after World War II.
The discussion examines how regulation and central planning have influenced innovation, the lessons learned from technological breakthroughs, and how societies can find the right balance between encouraging innovation and ensuring responsible governance.
UNECE
As the complexities of modern economies grow, traditional approaches to industrial policy face increasing scrutiny. For decades, debates have raged about how governments can intervene to foster innovation, address market failures, and create sustainable development paths. Today, industrial policy has undergone a transformation, and now embraces elements of market liberalism.
In this episode of Innovation Matters, Professor Michael Munger from Duke University explores these issues, suggesting that industrial policy often oscillates between two extremes: setting the foundational rules of the game for markets to thrive and directly managing industry outcomes through subsidies, regulations, or nationalization. He highlights the inherent tensions in these approaches, including the risks of rent-seeking, misaligned incentives, and the difficulty of predicting which innovations will succeed.
